The present invention relates generally to the field of payment transactions, and more particularly, to systems and methods for distributed, real-time authorization of payment transactions initiated by a mobile device. The systems and methods are capable performing the functions of existing centralized card networks in a unique and efficient manner, and the systems and methods further permit the implementation of the many features and advantages offered by modern computing devices when conducting payment transactions.
Traditional payment transactions between a merchant and a consumer often use credit or debit cards that are processed by a card reader or other point of sale (“POS”) device. The POS device reads static, preprogramed information from a magnetic strip on the card and transmits the information to an issuing bank through an acquirer (merchant) bank and a centralized card network (e.g., VISA™ or MASTERCARD™). The issuing bank approves or declines the transaction and, if approved, transmits a payment to the acquirer bank through the card network. The issuing bank also transmits an approval or decline notice to the POS device that is routed through the card network and the acquirer bank. The card network typically subtracts an interchange fee before routing the payment to the acquirer bank.
Traditional methods of conducting payment transactions have the disadvantage that the information exchanged cannot be customized for each transaction, and the methods are not capable of taking advantage of opportunities provided by recent advances in computing and mobile technology. To illustrate, it is now possible to initiate payment transactions using personal computers or cellular “smartphones” that are capable of transmitting and receiving a variety of useful information during a payment transaction, such as coupon codes, payment instructions, and additional security features for authenticating a consumer's identity (e.g., biometric information or machine gesture recognition).
It would, therefore, be advantageous to provide payment transaction systems and methods that are capable of processing customizable payment transactions initiated and conducted by computing devices. It would also be advantageous to provide distributed payment transaction systems and methods that permit direct communication between financial service providers, such as acquirer and issuing banks, without the need to route payment transactions through a centralized card network that deducts interchange fees.
The systems and methods of the present invention enable the new generation of payment transactions initiated and performed by computing devices and address the requirements needed to bring the such innovations to market by providing a low-cost, highly scalable, and resilient distributed banking and payment platform capable of performing real-time authorization of payment transactions initiated by mobile and other computing devices.